Asia Medical Device

Asia Medical Device: Emerging market opportunities and hurdles

Traditional emerging markets are often related to the BRIC countries (Brazil, Russia, India and China, with South Africa joined in 2010). It was predicted as early as in 2003, by Goldman Sachs, that China and India would become the first and third largest economies by 2050.

Nowadays, these countries grow mature, move a bit slower, and some hotter thing is threatening to replace them. Undoubtedly BRIC still represents tremendous opportunities, but they are less “emerging” and are more being seen as mature economies. The MSCI BRIC Index (which measures the equity market performance) fell 6.5% in the past 12 months before the 5th BRIC Summit in 2013, Indonesia gained about 9.4%, while the Philippines 37.7%. The latest list by MSCI published in November 2013 has 19 emerging markets globally, 6 in Asia: China India, Indonesia, Malaysia, the Philippines and Thailand. ASEAN is the world’s largest emerging region.

The development of medical device industries in China are similar to its infrastructure, chemical, automotive industries, MNCs entering in this country often follows a phased evolution. MNCs usually brought in high-end products with a premium price; local companies’ portfolios were incomparable at this stage. Soon after, local players saw the opportunity and build up their ‘just good enough” product line, and tailor it more suitable for local needs, they aggressively expand distribution depth and breadth, hire more local sales and services forces than a MNC. In the end, AMNC has to compete with both international and local suppliers. Winning strategy includes having adopted integrated market solutions, from identifying supply gaps and tailoring products to meet local mid-tier needs, leveraging partnerships and acquisition of local players, moving on from a hands-off distributor management, to an improved the after-sale service as a differentiator, These will serve the vast domestic market comprehensively in an efficient manner.

While looking at the next tier emerging markets, especially Indonesia, Thailand, and the Philippines, MNCs are still only competing with their International (sometimes regional, like Chinese players) peers. In Indonesia where the medical device market was about $780 million in 2012, close to 95% of total value are coming through imports, and international manufacturers accounted for 90% of all medical device registrations in the same year.

Distribution becomes the key to growth. Local agents play an important role in market development, marketing, sales, and after-sales service, especially when selling to public hospitals. Moreover, Indonesia doesn’t only equal to Jakarta, to cover an extensive territory, more than one distributor need to be appointed in order to reach rural and second tier cities, this often leads to a complicated, overlapping distribution network hard to manage, resulting in untrustworthy relationships between both parties and inaccuracy of market information provided by the distributors.

Questions that a CEO usually asks us:

What is the current market size and potential in of our organization’s key product(s)?

Which products/service should our organization focus on?

Where does our organization stand in terms of market share in the targeted region/country?

How can our organization win over the competitors (MNCs and Regional players)?

How can our organization minimize the channel conflict with local distributors while ensure the maximum of national coverage? How should our organization motivate them? What is the best mode of partnership?

Who are the key customers and how can our organization access them?

How can our organization refine the corporate image, positioning branding and promotion?

What sort of management team should our organization build in the targeted country?

How can our organization grow in the region/targeted country in the next 5-10 years?

For more details on how Solidiance can help you to successfully grow your Asia healthcare business, please meet our team or send us an email.